Squeezing welfare budget further is not the answer, says Iain Duncan Smith

Iain Duncan Smith is the most senior Catholic in Government (PA photo)

Work and Pensions Secretary defends his reforms in an article in this week's Catholic Herald

The most senior Catholic politician in Government has launched a defence of his welfare reforms in The Catholic Herald in the midst of pressure from colleagues to make even bigger cuts to spending.

Iain Duncan Smith, the Secretary of State for Work and Pensions, said the problem of worklessness would not be solved merely by expanding or shrinking the welfare budget.

His argument appears to respond to calls from George Osborne, the Chancellor of the Exchequer, and Steve Hilton, David Cameron’s ex-policy chief, to cut another £10 or £25bn from welfare funding.

Mr Osborne said in his Budget speech last month that the next spending review would have to cut the welfare bill to prevent “the full weight of the spending restraint” falling on other departments.

Mr Duncan Smith, however, said he believed an extra £10 billion in welfare cuts was not acceptable.

In The Catholic Herald this week Work and Pensions Secretary said: “When welfare spending balloons, as it has done, the temptation is to squeeze it. But – rather like a balloon – if you squeeze it at one end it will grow at the other. What we have to do is reduce demand.

“That is why our reforms are about changing the nature of the welfare system so that it acts as a springboard rather than a trap, moving people off the rolls not simply because they are no longer allowed access to benefits, but because they no longer need to.”

The Welfare Reform Bill, passed by Parliament in March, introduced a £26,000 household benefits cap and a single universal credit to replace six means-tested benefits and tax credits.

The law was expected to save £18bn a year by 2014-15.

At the time Mr Cameron hailed it as a “historic step in the biggest welfare revolution in over 60 years”.

Mr Duncan Smith said the measures were “not about cheese-paring, but improving incentives to work and rewarding those who progress into employment”.

He said: “We are making sure everyone who accesses the welfare system is on a journey – moving from dependence to independence. But if we are to help people on this journey, we have to recognise a simple fact. Not everyone is starting from the same place. Where someone comes from a community where worklessness has become ingrained into everyday life, there is no point in simply lecturing them about the moral purpose of work, or in wielding a bigger and bigger stick. Sticks only work if there is a way out.

“What you must tackle is the biggest demotivating factor that many people face – the fact that the complexity of the welfare system and the way it is set up creates the clear perception that work does not pay. It is this factor which can stop an individual’s journey back to work in its tracks. Changing this is what the universal credit and the Work Programme are all about.”

The Work Programme involves paying private companies and charities for getting people back into work.

A survey this week found that 22 per cent of the first 300,000 people on the scheme are employed after spending nine months to a year on the programme.

The Government is hoping that 36 per cent of those on the scheme will get jobs. Private and voluntary organisations are paid up to £6,000 for every person they place in work.

Liam Byrne, the Shadow Work and Pensions Secretary, was unavailable for comment.